SF 436 (LSB 2374SV (4) 85)

SENATE FILE 436

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO SSB 1240)

A BILL FOR

An Act relating to the historic preservation and cultural and entertainment district tax credit by modifying the total amount of tax credits that may be issued, the definition of substantial rehabilitation costs, and the qualifications for certain projects, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 404A.1, subsection 2, paragraph e, Code 2013, is amended to read as follows:
   e.  “Substantial rehabilitation” means qualified rehabilitation costs that meet or exceed the following:
   (1)  In the case of commercial property, costs totaling at least
 
fifty thousand dollars or fifty percent of the assessed value of the property, excluding the land, prior to the rehabilitation, whichever is less.
   (2)  In the case of residential property or barns
 
other than commercial property, costs totaling at least twenty-five thousand dollars or twenty-five percent of the assessed value, excluding the land, prior to rehabilitation, whichever is less.
    Sec. 2.  Section 404A.3, subsection 3, paragraph b, Code 2013, is amended to read as follows:
   b.  The eligible property shall be placed in service within
 
either sixty months of the date on which the project application was approved under this section, or seventy-two months of the date on which the project application was approved under this section if more than fifty percent of the qualified rehabilitation costs are incurred within sixty months of the date on which the project application was approved under this section.
    Sec. 3.  Section 404A.4, subsection 2, paragraph d, Code 2013, is amended to read as follows:
   d.  For the fiscal year beginning July 1, 2012, and for each fiscal year thereafter, the office shall reserve not more than forty-five million dollars worth of tax credits for any one taxable year.
    Sec. 4.  Section 404A.4, subsection 2, Code 2013, is amended by adding the following new paragraphs:
   NEW PARAGRAPH.  e.  For a fiscal year beginning on or after July 1, 2013, but before July 1, 2016, the office shall reserve not more than sixty million dollars worth of tax credits for any one taxable year.
   NEW PARAGRAPH.  f.  For the fiscal year beginning July 1, 2016, and for each fiscal year thereafter, the office shall reserve not more than fifty million dollars worth of tax credits for any one taxable year.
    Sec. 5.  Section 404A.4, subsection 4, paragraph a, Code 2013, is amended to read as follows:
   a.  The total amount of tax credits that may be approved for a fiscal year prior to the fiscal year beginning July 1, 2012, under this chapter shall not exceed fifty million dollars. The total amount of tax credits that may be approved for a
 
the fiscal year beginning on or after July 1, 2012, shall not exceed forty-five million dollars.

The total amount of tax credits that may be approved for a fiscal year beginning on or after July 1, 2013, but before July 1, 2016, shall not exceed sixty million dollars. The total amount of tax credits that may be approved for a fiscal year beginning on or after July 1, 2016, shall not exceed fifty million dollars.
    Sec. 6.  Section 404A.4, subsection 4, paragraph b, subparagraph (1), Code 2013, is amended to read as follows:
   (1)  Ten percent of the dollar amount of tax credits shall be allocated for purposes of new projects with final qualified rehabilitation costs of five
 
seven hundred
 
fifty thousand dollars or less.
    Sec. 7.  EFFECTIVE UPON ENACTMENT.  The following provision or provisions of this Act, being deemed of immediate importance, take effect upon enactment:
   1.  The section of this Act amending section 404A.3.
    Sec. 8.  APPLICABILITY.  The following provision or provisions of this Act apply to eligible property to be placed in service on or after the effective date of this Act: 
   1.  The section of this Act amending section 404A.3.
EXPLANATION
   This bill relates to the historic preservation and cultural and entertainment district tax credit by modifying the definition of substantial rehabilitation, the amount of tax credits that may be issued, and the qualifications for certain projects.
   The bill amends the definition of “substantial rehabilitation” for purposes of the credit. Under current law, a certain threshold amount of qualified rehabilitation costs are necessary in order to meet the definition of substantial rehabilitation and qualify for the tax credit. The threshold amount is different depending on whether the eligible property is classified as commercial property or classified as residential property or barns. The bill amends the residential property or barns classification to include all property other than commercial property. The bill also amends the threshold amount of qualified rehabilitation costs in the commercial property category to be the lesser of $50,000 or 50 percent of the assessed value of the property, excluding the land.
   The bill extends from 60 to 72 months the date by which eligible property is required to be placed in service after approval of a project application provided that more than 50 percent of the qualified rehabilitation costs are incurred within the first 60 months after approval of the project application. This provision takes effect upon enactment and applies to eligible property to be placed in service on or after that date. 
   The bill increases the amount of tax credits that may be approved and reserved. Under current law, not more than $45 million in tax credits may be approved for a fiscal year and reserved for any one taxable year. The bill increases this amount to $60 million for fiscal year 2013-2014, fiscal year 2014-2015, and fiscal year 2015-2016. For fiscal year 2016-2017, and for each fiscal year thereafter, the amount is $50 million.
   The bill amends the qualifications for certain projects. Under current law, 10 percent of the total amount of tax credits are required to be allocated to projects with qualified rehabilitation costs of $500,000 or less. The bill increases to $750,000 or less the amount of qualified rehabilitation costs needed for a project to qualify for the tax credits allocated to this category.